U.K. Tax Rates Would Sack Potential London-Based NFL Franchise

The NFL has long desired to expand its physical presence beyond the borders of the United States into Europe and other large markets. Over the past decade, these desires have slowly begun to take form with open discussions about the possibility of a team either relocating or expanding to a global metropolitan city in a new country. The most popular choice for the NFL and Roger Goodell appears to be London in the United Kingdom.

Since 2007, the NFL has hosted one game at Wembley Stadium in London; this year the Pittsburgh Steelers play the Minnesota Vikings on September 29. In doing so, the NFL is showcasing some of the league’s most popular stars in order to garner interest among international fans and test the market for the potential success a London-based or other international franchise might experience. While the NFL as a global and cross-cultural entity should seek to expand its influence and popularity, a permanent move to the U.K. would be financially detrimental to those that actually take the field during the season.

As former New England Patriot Tedy Bruschi stated this week on Football Today, “the taxes are higher in the United Kingdom. So you want to talk about money, that’s something players will look into.” Bruschi further expounded upon the high tax burden for players that could be face relocation saying, “what’s the difference going to be for players in terms of playing in the United States versus the United Kingdom? It’s going to be up there in 50 percent. Something players will frown upon.” The former three time Super Bowl champion even had his accountant examine what a move to London would do to his tax liability, and found it to be too oppressive.

Fortunately for Bruschi, he no longer faces the threat of paying the U.K.’s 45 percent top marginal tax rate, but other players may face that burdensome reality.

The Jacksonville Jaguars are continuously brought up as the team that could relocate as London’s permanent home team due to its small market and new ownership. The Jaguars’ franchise running back Maurice Jones-Drew – who stands to earn $4.95 million this season - would see his tax liability increase and after-tax earnings decrease if the team were to relocate to London.

Team Location

Total Tax Burden

Total Tax Liability

After-Tax Earnings

London, England

United Kingdom

44.4%

$2,208,449

$2,760,031

Jacksonville, Florida

United States

32%

$1,581,760

$3,368,240

* Disclaimer:Florida has no state income tax. Payroll taxes in each country are not factored into this analysis. Effects of the “jock tax” are not factored into this analysis.

If in this hypothetical relocation scenario for the 2013 NFL season the Jaguars remained in Jacksonville, Florida rather than move to London, England, Maurice Jones-Drew’s tax liability would be $626,689 less and would earn $608,209 more after-taxes. While the likelihood of the Jaguars relocating to London for the upcoming season is highly unlikely, the consequences of such a move remain the same regardless of year.

While playing an individual game in a different country each season doesn’t appear to pose a tax threat to players around the league, permanent foreign expansion would levy high income tax rates on players who might not necessarily have a say in what team they play for via the draft and trades. A move outside the U.S. could also see an expansion of the “jock tax” levied by foreign nations. Rather than seeking permanent international expansion, the NFL should aim to introduce a team to new markets in the United States where state income tax rates are more favorable to those who make the game memorable.